It's common for grandparents, aunts and uncles to open accounts for their young relatives.  And, unless the child earn more than the guideline for income as determined by the IRS, there may be no need to report the dividends earned.

However, if the child DOES earn more than the IRS guideline (in any earned income - employment and dividends combined) then whoever claims the child on his/her tax return must also report these dividends.

We recommend that you consult your tax advisor for advice on this matter and/or review the information available at www.irs.gov, specifically IRS Publication 929 - Tax Rules for Dependents and Children.